ABSTRACT

Industrial Growth and the Theory of Retardation:
Precursors of an Adaptive Evolutionary Theory of Economic Change

CRIC Discussion Paper No. 57

Professor J Stan Metcalfe

The central concern of this paper is economic growth under the rules of restless capitalism, rules under which multiple, uncoordinated innovative activities are ordered by market processes to produce patterns of growth and development in the economy as well as in its framing institutions. The central theme of this worldview is that growth follows from sequences of technical, organisational and institutional changes that create and absorb new areas of productive activity and consumption into the economic structure. From this angle, growth is the result of the exercise of imagination within the frame of a market system. These developments arise from within the system, and they are grounded, ultimately, in changes in private knowledge and public understanding (Metcalfe, 2001b; Potts, 2001). Thus, capitalism is restless because knowledge is restless; there never can be any equilibrium in respect of knowledge and, consequently, the development of an economy is unpredictable and open-ended. The social and institutional dimension of knowledge is as important as the economic dimension to any understanding of this dynamic and the decline of activity is as important as is expansion of activity in mapping the contours of development.

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